Zero rated supply treatment where services are provided without convertible foreign exchange must be reconciled with GST export rules; hearing directed.

The text raises whether the definition of export of services and zero rated supply conditioned on receipt of consideration in convertible foreign exchange must be harmonised with the territorial scope of services under the central GST law when services to a non-resident are provided without foreign exchange receipt; the interpretive question is admitted for consideration and respondents have been directed to answer, with the petitioner's refund claim to be considered subsequently and the matter listed for further hearing.

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Issues: (i) Whether Section 7 of the Central Goods and Services Tax Act, 2017 read with Section 16(1)(a) and Section 2(6) of the Integrated Goods and Services Tax Act, 2017 require harmonious interpretation in cases where services provided to an entity located abroad are without receipt of consideration in convertible foreign exchange, and whether such services can be treated as zero rated supply for refund purposes.

Analysis: The statutory framework involves (a) the scope of services under Section 7 of the Central Goods and Services Tax Act, 2017; (b) the definition and conditions of zero rated supply under Section 16(1)(a) of the Integrated Goods and Services Tax Act, 2017; and (c) the definition of export of services under Section 2(6) of the Integrated Goods and Services Tax Act, 2017 which requires receipt of consideration in convertible foreign exchange. The provisions raise a potential incongruity where a service may fall within Section 7 obligations despite absence of consideration, while Section 16(1)(a) and Section 2(6) condition zero rating on foreign exchange consideration. The matter requires interpretive resolution to reconcile the application of tax liability and entitlement to zero rated treatment/refund where no convertible foreign exchange is received. The procedural rule regarding refund claims and need for administrative remedy is relevant to the course of action but does not resolve the substantive interpretive question.

Conclusion: Issue (i) is admitted for consideration and notice is issued to the respondents to address the interpretive question; the petitioner's claim for refund is to be considered at a later stage if necessary. Notice to relevant authorities is directed and the matter is listed for further hearing.

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